Highland Tank & Mfg. Co. v. Ps Intern., Inc., CIV.A. 3:04-100.

• Decision Date: 30 August 2005
• Docket Number: No. CIV.A. 3:04-100.,CIV.A. 3:04-100.
• Citation: 393 F.Supp.2d 348
• Parties: HIGHLAND TANK & MFG. CO., Plaintiff, v. PS INTERNATIONAL, INC., Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

393 F.Supp.2d 348

HIGHLAND TANK & MFG. CO., Plaintiff, v. PS INTERNATIONAL, INC., Defendant.

No. CIV.A. 3:04-100.

United States District Court, W.D. Pennsylvania.

August 30, 2005.

COPYRIGHT MATERIAL OMITTED

Charles H. Dougherty, Jr., Gene A. Tabachnick, Joshua S. Bish, Reed Smith, Pittsburgh, PA, for Plaintiff.

Alan G. Towner, Eric G. Soller, Pietragallo, Bosick & Gordon, Pittsburgh, PA, for Defendant.

MEMORANDUM OPINION and ORDER

GIBSON, District Judge.

SYNOPSIS

This matter comes before the Court on Defendant, PS International, Inc.'s (hereinafter "Defendant") Motion to Dismiss and Brief in support thereof (Document Nos. 19, 20) and the Defendant's Motion to Quash Subpoenas, or in the alternative, a Motion for a Protective Order. (Document No. 23). Furthermore, this matter comes before the Court on the Plaintiff, Highland Tank & Mfg. Co.'s, Motion to Compel Discovery. (Document No. 18).

JURISDICTION AND VENUE

Jurisdiction over this civil action is proper pursuant to 35 U.S.C. § 1 et seq., Patent Laws of the United States (hereinafter "Patent Act"), 15 U.S.C. § 1051 et seq., the Lanham Act, 17 U.S.C. § 101 et seq., the Copyright Act of 1976, and pursuant to 28 U.S.C. §§ 1331 and 1338, and 15 U.S.C. § 1121 based on federal question jurisdiction. Jurisdiction over the state law trade secret claim is proper pursuant to 28 U.S.C. § 1367, supplemental jurisdiction. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1391(b) and 1400(b) for acts of infringement allegedly committed in this judicial district. (Document No. 13). This Court further determines that it lacks jurisdiction to consider Defendant's Motion to Quash Subpoenas, or in the alternative, Motion for a Protective Order. (Document No. 23). This Motion is essentially identical to Motions at Document Nos. 11, 14, 17, and 17-2. This Court lacks jurisdiction to consider Defendant's current Motion to Quash Subpoenas, or in the alternative, Motion for a Protective Order for the same reasons addressed in this Court's Memorandum Opinion and Order dated February 18, 2005. Highland Tank & Mfg. Co. v. PS Int'l, Inc., 227 F.R.D. 374 (W.D.Pa.2005). As to the Plaintiff's Motion to Compel Discovery (Document No. 18), the Court determines that this matter is properly before the Court pursuant to Fed. R. Civ. P. 37(a)(1).

FACTUAL AND PROCEDURAL BACKGROUND

On May 7, 2004, Highland Tank & Mfg. Co. (hereinafter "Plaintiff") filed a Patent Infringement claim (hereinafter "Count One") against the Defendant. The Plaintiff avers that the Plaintiff is the "owner by assignment of United States Patent No. 4,722,800 (the '800 patent)", which was issued on February 2, 1988 and titled "Oil-Water Separator."¹ (Document No. 1). However, the Plaintiff alleges that the Defendant "has manufactured, used, sold and offered for sale in the United States devices for separating immiscible liquids, particularly oil-water mixtures" which infringe upon "one or more claims of the '800 patent under 35 U.S.C. § 271(a) by making, using, selling, and/or offering for sale the PSRC Model Rectangular Separator and the PSR Model Rectangular Separator." (Document Nos. 1 & 13).

On December 23, 2004, with leave of Court, the Plaintiff filed an Amended Complaint, which included additional claims against the Defendant. (Document No. 13). Specifically, the Plaintiff alleged that based upon deposition testimony of two of the Defendant's principals, additional claims against the Defendant were supported and warranted.² The following counts were added by the Plaintiff in its Amended Complaint: Count TwoTrade Secret Misappropriation; Count ThreeViolation of the Lanham Act; and Count FourCopyright Infringement. Id.

On January 11, 2005, the Plaintiff filed a Motion to Compel Discovery. (Document No. 18). The following day, the Defendant filed a Motion to Dismiss Counts Two, Three, and Four of Plaintiff's Amended Complaint and Brief in support thereof. (Document Nos. 19, 20). The Defendant filed its Motion to Quash Subpoenas, or in the alternative, Motion for a Protective Order on February 1, 2005. (Document No. 23). This Motion has already been addressed in this Memorandum Opinion and Order under the Jurisdiction and Venue section. This Court first considers the Defendant's Motion to Dismiss.

RULE 12(b)(6), GENERALLY

In analyzing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6):

the district court [is] required to accept as true all allegations in the complaint and all reasonable inferences that can be drawn from them after construing them in the light most favorable to the non-movant. Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir.1989); D.P. Enters., Inc. v. Bucks County Community College, 725 F.2d 943, 944 (3d Cir.1984). In determining whether a claim should be dismissed under Rule 12(b)(6), a court looks only to the facts alleged in the complaint and its attachments without reference to other parts of the record. Moreover, a case should not be dismissed for failure to state a claim unless it clearly appears that no relief can be granted under any set of facts that could be proved consistently with the plaintiff's allegations. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984); D.P. Enters., 725 F.2d at 944.

Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3rd Cir.1994). In considering a Rule 12(b)(6) motion to dismiss, the court is not deciding the issue of whether a plaintiff will ultimately prevail, but is deciding whether the plaintiff is entitled to offer evidence to support claims. "Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely, but that is not the test." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90, 96 (1974).

[D]ismissal under Rule 12(b)(6) generally is not immediately final or on the merits because the district court will give the plaintiff leave to file an amended complaint to see if the shortcomings of the original document can be corrected. The federal rule policy of deciding cases on the basis of the substantive rights involved rather than on technicalities requires that the plaintiff be given every opportunity to cure a formal defect in the pleading. This is true even when the district judge doubts that the plaintiff will be able to overcome the shortcomings in the initial pleading. Thus, the cases make it clear that leave to amend the complaint should be refused only it if appears to a certainty that the plaintiff cannot state a claim.

CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1357 (3rd ed.2004)(footnotes omitted).

Trade Secret Misappropriation

The Defendant argues that this Court should dismiss Count Two of Plaintiff's Amended Complaint (Document No. 13) because Plaintiff's secrets were revealed in their expired "McCarthy Patent" and their secrets were otherwise widely circulated. (Document No. 20). Moreover, the Defendant asserts that Count Two is barred by the statute of limitations, laches, and claim preclusion.

1. Choice of Law

The Plaintiff seeks relief under both South Dakota and Pennsylvania trade secret law. This Court recognizes that it must apply the Erie doctrine to state law claims before the Court pursuant to its supplemental jurisdiction. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218, 228 (1966). The Third Circuit has stated that "... before a choice of law question arises, there must actually be a conflict between the bodies of law." On Air Entm't Corp. v. Nat'l Indem. Co., 210 F.3d 146, 149 (3rd Cir.2000). Accordingly, this Court will compare South Dakota's and Pennsylvania's trade secret laws.

A. South Dakota

South Dakota's trade secret laws are codified at S.D. CODIFIED LAWS § 37-29-1 (2005) et seq. A "Trade Secret" is "information, including a formula, pattern, compilation, program, device, method, technique, or process, that... [d]erives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and... [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy." S.D. CODIFIED LAWS § 37-29-1(4) (2005). The existence of a trade secret is a mixed question of law and fact. The legal question is whether that which is offered as a trade secret could legally be considered a trade secret within the meaning of the first portion of S.D. CODIFIED LAWS § 37-29-1(4) (2005), viz., the portion referring to a "formula, pattern, compilation, program, device, method, technique, or process...." Paint Brush Corp. v. Neu, 599 N.W.2d 384, 389 (S.D.1999). Furthermore, the statute provides that "[a]n action for misappropriation must be brought within three years after the misappropriation is discovered or by exercise of reasonable diligence should have been discovered." S.D. CODIFIED LAWS § 37-29-6 (2005). South Dakota's trade secret statute took effect on July 1, 1988. S.D. CODIFIED LAWS § 37-29-11 (2005).

B. Pennsylvania

Pennsylvania has enacted a trade secret statute that is nearly identical to South Dakota's. 12 Pa.C.S.A. § 5301 et seq. (Purdon's 2005). However, the Uniform Trade Secrets Act did not take effect until April 19, 2004, 12 Pa.C.S.A. § 5301, and the Act does not apply to misappropriation occurring before the effective date of the act, including a continuing misappropriation that began before the effective date and continues after the effective date. 2004 Feb. 19, P.L. 143 No. 14 § 4. The Defendant asserts that Plaintiff had knowledge of Defendant's alleged misappropriation in 1999 (Document No. 20) and the Plaintiff alleges that the misappropriation occurred in 1998. (Document No. 13). Clearly, the statute does not apply to the case sub judice. Accordingly, this Court examines Pennsylvania common law trade secret law.

Under...